United Online Announces Sale of Classmates, Inc. for $30 Million in
All-cash Transaction

As a result, updates third quarter and full year 2015 guidance

August 12, 2015 06:00 AM Eastern Daylight Time

WOODLAND HILLS, Calif.--(BUSINESS WIRE)--United Online, Inc. (NASDAQ: UNTD), a leading provider of consumer
services and products over the Internet, today announced that it has
completed the sale of all of the stock of its wholly-owned subsidiary,
Classmates, Inc., to Intelius Holdings, Inc. for $30 million cash,
subject to a post-closing working capital adjustment.

“This is a great outcome for United Online and is fully consistent with
our strategy to focus on our growth areas of e-commerce and loyalty and
value-based communications,” said Francis Lobo, President and Chief
Executive Officer of United Online. “Importantly, this divestiture of a
non-strategic asset will enable us to allocate additional capital to
fuel growth in our existing businesses and in new products. Further, M&A
remains an integral part of our strategy as we continue to evaluate
complementary opportunities in our growth areas.”

Business Outlook

As a result of this sale, United Online is updating its guidance for the
third quarter ending September 30, 2015 and for the full year ending
December 31, 2015 as follows:

Third Quarter of 2015

Revenues within a range of $34.0 to $37.0 million;

Adjusted OIBDA within a range of $3.5 to $5.5 million; and

Operating income within a range of $0 to $2.0 million.

Full Year 2015:

Revenues within a range of $149.0 to $154.0 million;

Adjusted OIBDA within a range of $19.0 to $24.0 million; and

Operating income within a range of $3.9 to $8.9 million.

The table below reconciles the Company’s guidance for operating income,
a GAAP measure, to adjusted OIBDA, a non-GAAP measure.

United Online, Inc. (NASDAQ: UNTD), through its operating subsidiaries,
is a leading provider of consumer products and services over the
Internet, where the company’s brands have attracted a large online
audience that includes more than 40 million registered accounts. The
Company’s primary Communications service is Internet access. The
Company’s Commerce & Loyalty segment provides a complete web, browser
and mobile shopper experience through a portfolio of apps, browser
extensions and online portals and promotes commerce and other engagement
from its loyalty marketing service. The Company’s Social Media segment
provides social networking services and products. United Online is
headquartered in Woodland Hills, CA, and operates through a global
network of locations in the U.S., Germany, and India.

Non-GAAP Measures

In evaluating the company’s performance, management uses adjusted OIBDA,
calculated both on a consolidated and segment basis, and free cash flow
measures that are not determined in accordance with accounting
principles generally accepted in the United States of America (“GAAP”).
These measures are adjusted to exclude certain non-cash expenses such as
depreciation, amortization, stock-based compensation, and impairment of
goodwill, intangible assets and long-lived assets. In addition, these
measures are adjusted to exclude the items discussed below because such
items are either operating expenses that would not otherwise have been
incurred by the company in the normal course of the company’s business
operations or are not reflective of the company’s core results over
time. These items may include recurring as well as non-recurring items.
These adjustments should not be construed as an inference that all of
these adjustments or costs are unusual, infrequent or non-recurring. For
example, certain restructuring and other exit costs may be considered
recurring given the company’s ongoing efforts to be more cost effective
and efficient, certain litigation or dispute settlement charges or gains
may be viewed as recurring given that the company is continually
involved in, and resolving, litigation, arbitration, investigations,
disputes and similar matters, and certain transaction-related costs may
be deemed recurring given the company's regular evaluation of potential
transactions. Notwithstanding that certain charges, costs or gains may
be considered recurring, in order to provide meaningful comparisons, the
company believes that it is appropriate to adjust for such charges,
costs or gains because they are not reflective of the company’s core
results and tend to vary based on timing, frequency and magnitude.

Litigation or Dispute Settlement Charges or Gains—These charges
or gains include estimated losses for which we have established a
reserve, as well as actual settlements, judgments, fines, penalties,
assessments or other resolutions against, or in favor of, the company
related to litigation, arbitration, investigations, disputes or similar
matters. Insurance recoveries received by the company related to such
matters are also included in these adjustments.

Transaction-Related Costs—The company excludes certain expense
items resulting from actual or potential transactions such as business
combinations, mergers, acquisitions, dispositions, spin offs, financing
transactions, and other strategic transactions, including, without
limitation, (i) compensation expenses and (ii) expenses for advisors and
representatives such as investment bankers, consultants, attorneys, and
accounting firms. Transaction-related costs may also include, without
limitation, transition and integration costs such as retention bonuses
and acquisition-related milestone payments to acquired employees.

Definitions of Non-GAAP Measures

(1) Adjusted operating income (loss) before depreciation and
amortization (“adjusted OIBDA”) is defined by the company as operating
income (loss) before depreciation; amortization; stock-based
compensation; restructuring and other exit costs; litigation or dispute
settlement charges or gains; transaction-related costs; and impairment
of goodwill, intangible assets and long-lived assets. The company’s
definition of adjusted OIBDA has been and may continue to be modified
from time to time to take into account non-cash or unusual, infrequent
or non-recurring charges. Management believes that because adjusted
OIBDA excludes (i) certain non-cash expenses (such as depreciation,
amortization, stock-based compensation, and impairment of goodwill,
intangible assets and long-lived assets) and (ii) expenses that are not
reflective of the company’s core operating results over time (such as
restructuring and other exit costs, litigation or dispute settlement
charges or gains, and transaction-related costs), this measure provides
investors with additional useful information to measure the company’s
financial performance, particularly with respect to changes in
performance from period to period. Management uses adjusted OIBDA to
measure the company’s performance. The company’s board of directors has
used this measure as a basis in determining certain compensation
incentives for certain members of the company’s management. Adjusted
OIBDA is not determined in accordance with GAAP and should be considered
in addition to, not as a substitute for or superior to, financial
measures determined in accordance with GAAP. A limitation associated
with the use of adjusted OIBDA is that it does not reflect the periodic
costs of certain tangible and intangible assets used in generating
revenues in the company’s business. Management evaluates the costs of
such tangible and intangible assets through other financial activities
such as evaluations of capital expenditures and purchase accounting. An
additional limitation associated with this measure is that it does not
include stock-based compensation expenses related to the company’s
workforce. Management compensates for this limitation by providing a
summary of stock-based compensation expenses within the accompanying
table and in the footnotes accompanying its financial statements. A
further limitation associated with the use of this measure is that it
does not reflect the costs of restructuring and other exit costs,
litigation or dispute settlement charges or gains, transaction-related
costs, and the impairment of goodwill, intangible assets and long-lived
assets. Management compensates for this limitation by providing
supplemental information about such charges, gains and costs within its
financial press releases and SEC filings, when applicable. An additional
limitation associated with the use of this measure is that the term
“adjusted OIBDA” does not have a standardized meaning. Therefore, other
companies may use the same or a similarly named measure but exclude
different items or use different computations, which may not provide
investors a comparable view of the company’s performance in relation to
other companies. Management compensates for this limitation by
presenting the most comparable GAAP measure, operating income (loss),
directly ahead of adjusted OIBDA within its financial press releases and
by providing a reconciliation that shows and describes the adjustments
made. A reconciliation to operating income (loss) is provided in the
accompanying table. In addition, many of the adjustments to the
company’s GAAP financial measures reflect the exclusion of items that
are recurring in nature and will be reflected in the company’s financial
results for the foreseeable future.

Cautionary Information Regarding
Forward-Looking Statements

This release contains forward-looking statements within the meaning
of the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, as amended, based on our current expectations,
estimates and projections about our operations, industry, financial
condition, performance, results of operations, and liquidity. Statements
containing words such as “may,” “believe,” “anticipate,” “expect,”
“intend,” “plan,” “project,” “projections,” “business outlook,”
“estimate,” or similar expressions constitute forward-looking
statements. These forward-looking statements include, but are not
limited to, statements regarding: future financial performance and
results; revenues; operating expenses; operating income (loss); capital
expenditures; depreciation and amortization; stock-based compensation;
restructuring and dispute settlement costs; and strategic initiatives.
Potential factors that could cause actual results to differ materially
from those in the forward-looking statements include, among others: the
effect of competition; our inability to maintain or increase our
advertising revenues; risks associated with litigation and governmental
regulations or investigations, including reviews of business practices
such as marketing, billing, renewal, and post-transaction sales
practices; risks associated with the integration or commercialization of
new businesses, products, services, applications or features, or the
success of new business models; our inability to maintain or increase
the number of free and pay accounts, visitors to our websites, and
members; problems associated with our operations, systems or
technologies, including security breaches or inappropriate access to our
network systems; our inability to retain key customers, vendors and
personnel; changes in tax laws, our business or other factors that would
impact anticipated tax benefits; as well as the risk factors disclosed
in our filings with the Securities and Exchange Commission (www.sec.gov),
including, without limitation, information under the captions
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and “Risk Factors.” Readers are cautioned not to place
undue reliance on these forward-looking statements, which reflect
management’s analysis only as of the date hereof. Any such
forward-looking statements are not guarantees of future performance or
results and involve risks and uncertainties that may cause actual
performance and results to differ materially from those predicted.
Reported results should not be considered an indication of future
performance. We undertake no obligation to update these forward-looking
statements to reflect the impact of events or circumstances arising
after the date hereof, unless required by law.